`Dell and Back:’ My Texas Monthly debut

Not all investors are happy with Michael Dell's buyout offer.

Not all investors are happy with Michael Dell’s buyout offer.

A few weeks ago, the editors at Texas Monthly asked me to write a piece about the buyout battle being waged for Dell Inc. I covered Dell in the 1990s and early 2000s, and I jumped at the chance. The shareholder vote on the buyout was supposed to take place Thursday morning, but it was delayed.

So the magazine decided to post my article on its web site, along with a short update from me at the top.  (If you prefer to read it in print, the next issue should be on shelves soon.)

The delay of the vote isn’t a good sign for Michael Dell’s plan to take his company private, although I still believe he’s likely to prevail. I’ll be doing another update for the TM website next week when the vote is supposed to be concluded.

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About lorensteffy

Loren Steffy is a writer, speaker and consultant. He is the author of Drowning in Oil: BP and the Reckless Pursuit of Profit published by McGraw-Hill in 2010 and The Man Who Thought Like a Ship, published by Texas A&M University Press in April 2012. A journalist for more than 25 years, he was most recently the business columnist for the Houston Chronicle.
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4 Responses to `Dell and Back:’ My Texas Monthly debut

  1. I was sent your Texas Monthly article via a facebook friend and asked to comment, I read the article, and replied “I can’t seriously discuss any article that includes “Dell has never been an innovator”.”

    I think the article was an interesting piece of posturing around the current/past business issues, I’d disagree with your forward looking projections though. MSD staying or going is key, if MSD leaves over the LBO, it’s definitely unclear that Dell would have either the money or investment to do much of anything it isn’t already doing; and a lot of what it is already doing would likely be sold, or stopped. So I think for Dell to continue to prosper, it needs MSD one way or the other.

    I for one have seen no evidence in the places outside our traditional business that we are trying to do what IBM or HP does, “more cheaply”. Again that isn’t a strategy, it’s a tactic. It’s just joining a race to the bottom, which I understand might be a strategy but isn’t one we are pursuing.

    Which leaves me on innovation. I personally believe, and I’ve seen internal evidence of it it as well, that not only does Dell innovate, it has a great opportunity to do so in the future. Dell stance on patents is fundamentally different than other companies, if your measure of innovation is based on number of patents filed or granted, well good luck with that.

    I think if you go back and look at the product delivery, even in the laptop space, but especially more recently in the mobile and server/enterprise space there are plenty of examples of innovation. What is missing is the business follow-up. The Dell Streak 7 is a great example. Yep, at the time it was a freaky response to the iPhone, but it was different, it was innovative. There were follow-on products designed but Dell was judged harshly in the marketplace, the initial numbers didn’t come back well, and lo and behold there was a stock price downtown, unrelated, that required improving e/r numbers and somewhere along the line the mobile division got cut.

    Since I’ve been at Dell(2009) I’ve seen this happen a few times, but this is the most obvious example. Looking back through some of the flagship Dell products though there are other products and certainly features that suffered the same fate.

    The question is, what are the things Dell will invest in as a private company, away from the weekly, monthly, quarterly need to report and respond, often to external market pressure, that will give us the time and space to return with quality, innovative products and services?

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    • lorensteffy says:

      Dell has not historically been an innovator, and while it may have taken steps to become one now, it has yet to show it can reap the benefits. Streak may have been innovative, but it wasn’t successful. I agree, though, that that’s what the buyout is all about, and as I said in the article, I think replacing Michael Dell would be a mistake. I also don’t think that’s likely to happen. Icahn has no interest in owning Dell. He has succeeded in doing what he always does — he got Michael to raise his bid.

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  2. We can agree to differ then. I’ve only been at Dell 3.5 years, so my “history” is only recent. Again, what I’ve seen is that Dell can innovate, and I have hundreds of organic, not acquisition, examples. The Streak was on I thought you’d know. The point you make is key, and thats what I hope the LBO gives us, the business focus to make these innovations successful. Thanks

    Like

  3. Pingback: Dell and Back: Loren Steffy’s Writings and Ramblings | Adventures in systems land

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